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Original article URL: http://bridgemi.com/2016/08/michigan-and-the-death-of-entrepreneurship/

Economy & competitive position

Michigan and the death of entrepreneurship

Jeff Drushal is betting on himself by opening his own metal fabricating business in Jackson, bucking a trend of fewer start-ups in Michigan. He hopes to employ a dozen workers in five years. (Bridge photo by Mike Wilkinson)

Jeff Drushal is betting on himself by opening his own metal fabricating business in Jackson, bucking a trend of fewer start-ups in Michigan. He hopes to employ a dozen workers in five years. (Bridge photo by Mike Wilkinson)

In a tiny brick building on the west side of Jackson, Jeff Drushal is living his dream, stepping out onto a ledge that is both frightening and exhilarating.

Married and with a daughter, Drushal, 34, just left a steady job as a supervisor in a machine shop and surrounded himself with decades-old – but still working – metal cutters, lathes and welding guns. He is betting on his own skills and business acumen to make the transition from employee to employer.

In five years, he hopes to generate enough work that he’ll be able to hire and train a dozen workers at his metal fabrication shop in this struggling manufacturing city of about 33,000.

To say he has doubters is an understatement.

“Half of them think I’m crazy,” he said of his peers. “And half the people think I’m going to answer only to myself – and sit at home and watch TV all day.” He chuckles. He won’t be watching much TV.

Michigan needs a lot more people like Jeff Drushals. Instead, Bridge found, the state has too many business owners who have either closed shop or are hesitant to set up new businesses.

Counties across Michigan, mostly in the rural north, have suffered among the steepest declines in the nation. Indeed, over the past decade, nearly 1-in-4 counties in the U.S. with the sharpest drops in businesses were in Michigan.

Roscommon County, home to Houghton Lake, lost nearly 24 percent of its businesses in this period, while Genesee County, home to Flint, lost 16 percent, or more than 1,300 employers.

Statewide, Michigan has lost nearly 18,000 businesses. And experts say any hopes of reversing the state’s decline rests on a couple of fundamentals: more access to seed money, and improving the business literacy of first-time entrepreneurs.

A recent national study found that while business openings remain flat in much of the nation, real growth is taking place in just a handful of counties across the nation, mostly around major U.S. cities.

“You need new businesses to create new jobs,” said John Lettieri, co-founder of Economic Innovation Group, a Washington, D.C.-based think tank, which did the analysis.

The report, “The New Map of Economic Growth and Recovery,” noted that number of new businesses opening nationally from 2010 to 2014 was less than half of those opened between 2002 and 2006. Much of the new business activity was limited to just 20 counties nationally, mostly around thriving metro areas like New York City, Los Angeles, Dallas and Miami.

None were in Michigan.

“Missing” generation looms

The impact of shuttered storefronts has been particularly harsh in Michigan.

Huge swaths of the state are seeing far fewer businesses selling food, offering services or making things, according to employer data from the U.S. Bureau of Labor Statistics analyzed by Bridge. In fact, all but two of Michigan’s 83 counties saw the number of employers decline between 2006 and 2015, during which the state lost nearly 18,000 businesses statewide.

Only 51 counties nationwide lost more than 20 percent of its employers between 2006 and 2015. Of those, 12 are in northern Michigan.

“(T)he geographically uneven nature of the collapse in start-ups implies that wide swathes of the country will soon be contending with the consequences of a missing generation of enterprise,” EIG reports.

The sobering statistics raise questions about Michigan’s long-term prospects for economic revival, despite the state enjoying low unemployment rates and rising numbers of jobs, often in existing businesses that are hiring following the recession.

EIG’s report did not address why some states did worse than others but it did note that rural counties – like those across northern Michigan – saw the biggest losses.

Michigan businesses slow to recover: No state in the nation has as many counties that suffered steep declines in businesses as Michigan, where 12 counties lost 20 percent or more of their business establishments.

Michigan businesses slow to recover: No state in the nation has as many counties that suffered steep declines in businesses as Michigan, where 12 counties lost 20 percent or more of their business establishments.

Lettieri said one of the biggest obstacles to people opening new businesses has been access to capital. Start-ups typically get their initial cash from their savings and homes. As Michigan workers well know, wages and housing values in the state remain below pre-recession levels.

In addition, Michigan, with its traditional reliance on manufacturing, does not have a long tradition of entrepreneurship: The state ranks just 37th in the country in percent of self-employed workers.

So Michigan faces perhaps even more of a battle to develop an economic future that relies less on the swings in the auto industry, manufacturing and a number of large employers.

“We’re in uncharted water here. Nobody knows what happens next,” Lettieri said. If it makes Michigan feel better, it’s not alone, he added. “This is a national challenge.”

Changing gears

Plenty of economic development professionals in Michigan spent decades “chasing smokestacks” – trying to get the next large manufacturer to pick their town or county. It added value to the tax rolls, brought in decent jobs and yielded a net-plus for the community. Big business, like U.S. savings bonds, provided steady, reliable gains for millions of Michigan families from Detroit to Flint to Cheboygan.

That is, of course, is no longer true, and hasn’t been for some time, with the state’s manufacturing sector experiencing volatile swings in earnings and employment, despite occasional triumphs.

Not that the state is ignoring the problem.

In Lansing, economic development officials are trying to diversify that region’s economy.

“If you’re not embracing that entrepreneurial culture, you’re not going to be sustainable in the future,” said Tim Daman, president and CEO of the Lansing Regional Chamber of Commerce.

Daman noted that the vast majority of employers nationwide have 20 employees or less. That shift has forced a change in mindset.

While the Lansing chamber still chases factories, it is also nurturing a growing insurance industry and is looking to add new businesses around the National Superconducting Cyclotron Laboratory and a yet-to-be-completed Facility for Rare Isotope Beams at Michigan State University. The particle accelerator will allow scientists from around the globe to conduct rare isotope research when it opens in 2020.

The chamber is anticipating the facility will also spawn related businesses in the burgeoning field of nanotechnology. with one study predicting the facility will create $1 billion in investment over its first decade.

Daman said the region is working to help would-be business owners get their start: There are seven business incubators in the region, where startups can share expenses as they try to build their nascent businesses.

Thinking through a business plan

But for new entrepreneurs to flourish in Michigan, they will need more than passion.

“There’s lots of ideas,” said Jackie Krawczak, president of the Alpena Area Chamber of Commerce, for new businesses. The problem, she and others point out, is a profound lack of understanding of what it takes to start and run a business.

So business leaders and banks get pitched ideas on lawn maintenance businesses and cupcake and coffee shops – with little attention to the economics of what it takes to survive in the shadow of the neighborhood Starbucks.

“Do you realize how many cups of coffee you have to sell to make it work,” Krawczak said she asks aspiring barista barons. Most do not.

What many people with business dreams don’t realize is the most basic of rules: No bank will lend you 100 percent of your start-up costs.

“If you don’t have a lot of cash to start, you can’t start,” said Shawn Preissle, a business consultant for the Small Business Development Center of Michigan, a federally and state-funded program to coach people considering start-ups.

Indeed, lack of capital remains one of the biggest impediments to new businesses, EIG’s Lettieri said. The Great Recession of 2007-09 took a huge chunk out of the traditional pillars of a start-ups’ cash: home equity, savings and lines of credit.

Housing values plummeted, saving rates fell with falling incomes and banks tightened lending requirements. Those declines hit Michigan particularly hard, with many people still owing more on their homes than they are worth and many others forced into early retirement by job losses.

Even if they surmount that hurdle, some new business owners don’t understand simple concepts like working capital and accounts receivable and experts say most have no idea how to write a business plan – the document that proves to any lender that your business is a well thought out venture and a safe risk for investment.

“Fifty percent- (of would-be business owners) just don’t understand what it takes,” said Preissle of the SBDC.

Luckily, that’s why she has her job – and why SBDC helps people across the state with offices in 10 regions.

Last year SBDC reported helping with the formation of nearly 350 businesses in Michigan that created or retained nearly 4,000 jobs.

The organization is one of myriad programs operated by the state and local entities, including universities and foundations, designed to foster economic development. There are accelerators (similar to incubators except the accelerator typically invests in the companies in exchange for equity in the business), loan programs and business pitch competitions (Grand Rapids, Lansing, Detroit, Ludington, and across the state), where prospective businesses “pitch” their ideas, hopping for seed funding. In Traverse City, organizations are pitching in, looking to foster new business and fund good ideas.

Peace, love and beer

Shannon Schwabe was a wedding photographer following a short career in logistics. Her husband Scott is a firefighter in St. Clair Shores, just north of Detroit. They were looking to start a business when Scott suggested a hop farm. An avid craft beer lover, Scott knew that local breweries were flourishing and they needed hops to make the beer – and most hops came from the West Coast.

Then Shannon saw a photo of a wedding at a hop farm, with a couple standing in front of the pine-tree shaped hops in the background.

Bingo! They hit upon the idea for Hoppily Ever After Farms a hop farm and destination wedding venue. They are growing hops; the weddings will come later, Schwabe said.

That led the couple to get help from Economic Development Alliance of St. Clair County – their farm is in the southern part of the county, just north of Algonac – and put their idea in the running for a business competition, GreenLight Michigan.

They won the top prize – $5,000 – at the regional event in Port Huron and went on to the state event in Lansing, where they competed against businesses pitching diagnostic medical strips, commuter ride-sharing software and high-tech outdoor gear.

Their competition, Shannon Schwabe said, was “trying to save the world. We just want peace, love and beer.” They did not win the big prize ($50,000) but used their $5,000 winnings to help them plant three acres of hops with plans to expand to 40.

Scott said he will remain a firefighter for now. Both have assumed the life of entrepreneurs, which can be hard.

“We just wanted to do something within our means and do something we’re passionate about,” Shannon said. Still, she knows it will mean delayed gratification – it’ll be a couple years before they can get the 1,000 pounds of hops per acre that will make them profitable – “and going a couple of years not seeing your friends and family.”

Roscommon economic development leaders created a program to help real estate agents sell local businesses, calling each empty storefront a “Dream for Sale.” It’s worked somewhat: a few businesses and a nonprofit have recently moved in. (Bridge photo by Mike Wilkinson)

Roscommon economic development leaders created a program to help real estate agents sell local businesses, calling each empty storefront a “Dream for Sale.” It’s worked somewhat: a few businesses and a nonprofit have recently moved in. (Bridge photo by Mike Wilkinson)

Dream for sale

In Roscommon, a small village east of Houghton Lake, downtown is a tidy mix of storefronts. A rail line cuts through town and when a train goes by a local bar bestows a free shot of booze on customers.

When Kurtis Norton first bought Village Hardware in town 16 years ago, every storefront was occupied. Not anymore. All across the several blocks of the main business district, a ubiquitous sign appears: “Dream for Sale.” It’s a realty sign marking an “opportunity” for a would-be business.

“We have so many open and close, open and close,” Norton said during a recent walk through town. “We’re a revolving door.”

Roscommon County lost nearly a quarter of its business establishments between 2006 and 2015, though overall employment was down just 12.5 percent. Norton notes the impact of big box stores, with the addition of a Home Depot and a Lowe’s nearby, taking a chunk out of his own bottom line (he owns another hardware store nearby).

Kurtis Norton, 42, came to Roscommon 16 years ago after buying Village Hardware. When he did, all the stores around him were occupied. Now, vacancy signs are all around as the village struggles to lure and keep businesses, a trend consistent across northern Michigan. (Bridge photo by Mike Wilkinson)

Kurtis Norton, 42, came to Roscommon 16 years ago after buying Village Hardware. When he did, all the stores around him were occupied. Now, vacancy signs are all around as the village struggles to lure and keep businesses, a trend consistent across northern Michigan. (Bridge photo by Mike Wilkinson)

What he doesn’t see are enough people who want to take the shot he did and invest. A couple storefronts have filled recently, but one is a nonprofit running a model train store and two are second-hand stores.

“Startups are hard,” said Andrea Weiss, manager of Roscommon’s branch of Chemical Bank, just a few blocks from downtown. Credit is tight these days, far tighter than it was when she started at the bank 35 years ago.

“It was a lot simpler back then,” she said. “I think 2008 scared a lot of people. It scared a lot of financial institutions for sure.”

And yet few people are coming in asking for startup money. She said the bank would have a hard time finding would-be entrepreneurs even if it suddenly had millions to invest. What they mostly get are people wanting to start landscaping and maintenance businesses – an income for that person, but not likely a jobs generator for the town.

Steely optimism

Jeff Drushal is old school.

Some of the machine tools he’s bought for his Jackson machine shop are older than him. But Drushal is an example of the entrepreneur that is willing to take an idea and make it a reality.

He always knew he wanted to own his own shop but developed his skills first while working for others. It wasn’t until he started planning a business for his wife – he said he’d put his own dreams on hold – that he realized he had the skills, the knowledge and the opportunity now.

Now he’s on the hook for rent in a small, 1,800-square-foot shop and when Bridge stopped by recently, he was welding a ladder for a boat. It was his first day and Drushal Fabricating had already taken delivery on the metal tubing that will be his first real job: Creating a railing for friend’s lake house.

Drushal is confident. But is he nervous?

“I honestly don’t know if I can afford to be nervous. I’m too focused on succeeding.”

 Jeff Drushal always knew he wanted to be his own boss and now, at 34, he’s giving it a shot. He’s welding a ladder here in his small space on Jackson’s west side. (Bridge photo by Mike Wilkinson)

Jeff Drushal always knew he wanted to be his own boss and now, at 34, he’s giving it a shot. He’s welding a ladder here in his small space on Jackson’s west side. (Bridge photo by Mike Wilkinson)

Mike Wilkinson is Bridge’s computer-assisted reporting specialist. Mike held a similar role at The Detroit News. See more stories by him here.

30 comments from Bridge readers.Add mine!

  1. William C Plumpe

    So it seems that while cutting taxes may provide some kind of help for small businesses
    what is really needed is access to capital and business management training.
    I believe that both capital and business training programs are available but are not
    provided in a focused and consistent manner at either the State of Federal level.
    This article should send a strong signal to State and Federal policy makers that
    some kind of integrated business start up program that provides easy access
    to capital and management training should be made available throughout Michigan.
    Are you listening Lansing and Washington?

  2. George

    But what about our Republican friends who forced through legislation lowering small (and large) business tax rates along with the “right to work” that came with a guarantee that this would make Michigan attractive to new businesses and would actually create jobs. There doesn’t seem to have been a cause and effect, but we’re stuck with those lower tax rates, joblessness, and a Republican governor and majority legislature that doesn’t have a clue as to how to turn us around. Governor Granholm didn’t do any better in her last term. We were a great manufacturing state, but the majority of our citizens have turned their backs on US manufacturing in favor of low prices and high unemployment.

    1. duane

      I notice all you do is complain and offer no encouragement for the people that will create the jobs.

      If you check our history the big companies all started small with someone willing to take the risks and make the sacrifices to create what wasn’t there and did open jobs for those who want to work. Look around our state which business was jobs waiting to be filled and not someone starting from nothing?

    2. Mike

      “Stuck” with lower taxes? Lower taxes are a GOOD thing. Why would anyone want higher taxes? Makes no sense.

    3. Tom F

      I don’t think George has ever written a payroll check or mailed out a 1099.

      George, 50% of my income goes out in taxes. 50%,George. Fifty.Percent.

      And, I watch it being squandered by your benevolent, all knowing government.

      George, I just pass those costs along to you, my customer. Did you know that, George?

      Lower my taxes, I have more capital, I can invest in more equient, etc, hire more people.

      Walk aile iny shoes, George.

  3. Dawn

    I am a small business owner. There are so many taxes for small businesses in Michigan.
    We are nickel and dimed. We try to make a profit off of volume, since there is a tax for everything. The reason we do not have more small businesses in Michigan is because of the high taxes. If I didn’t have roots in Michigan, I would probably relocate my business. We are not here for the tax breaks. We also pay $500 a month for our forced healthcare (family of 3) with a $12,000 deductible. Taxation without representation. Small businesses are getting squeezed out. They know that they can move their jobs and actually stay in business.

    1. Frances

      That health insurance is outrageously horrible. I see why people are willing to pay the penalty to not have any. That would make me think twice about not working for ‘the man’.

  4. Jerry Saylor

    Its more about rules and regulations that stymie so many small business men and women who would like to start or expand a business. Just think of the hoops that they go through to get the necessary permits, hire workers, get a loan, and continue a business. They deal with uncooperative state and local officials who don’t seem to care whether they proceed or stop in their dreams to be a business owner. It wasn’t always that way, but at least people several generations back could succeed or fail on their own. We have become a nation that wants to rule from the top and that includes both major parties.

  5. jeff

    The governments are focused on corporate businesses, not small businesses. They see lots of jobs and tax revenue, even though rarely do the number of jobs promise come to fruition and they always ask for long term tax breaks. In many types of business, if you have a great or unique idea, it is not long before a larger corporation takes notice and will use its resources to compete, normally driving the little guy out of business. I had a small business and closed it two years ago. While the lower prices from competitors helps the consumer, it does eliminate well paying jobs needed to live in today’s world. While not true in all cases, my competitor who opened up in town and forced prices down has a revolving door for illegal immigrants. When someone has worked there for about a year, they fire them and hire another at minimum wage. My main supplier, who is considered a small business, chose to provide insurance for their employees. Few people know but if you choose to do this, you have to pay the government an additional fee for this privilege, every year. I am glad I am not in business anymore because it would be impossible to even try. Back to the point. With governmental entities focusing all their efforts on large domestic and foreign companies, we are quickly approaching the day where small businesses will no longer exist. Unless you are an immigrant and reap the benefits afforded by the government to become a business owner.

    1. Jonathan Ramlow

      Jeff, I wish it weren’t so, but nowadays considering government on one hand and big business on the other is making a distinction without a difference. Keeping a Congressional career going for 20+ years, even in a so-called safe seat, has become so expensive that our representatives come to depend on contributors with deep pockets. And who are those contributors? Quite often, I suspect, they are big businesses whose boards of directors include former representatives, still feeding at the corporate trough. When was the last time you heard about or knew someone who served 2 or 3 terms in Congress but then returned to a moderately prosperous local family business? When was the last time you heard of or knew about a Senate or gubernatorial campaign run, successfully or not, on less than a million dollars? This is most definitely not how the revered Founders imagined things. The well-known statue of George Washington in front of the Federal Hall Memorial depicts Pres. Washington with his hand held palm down, not palm up waiting to be greased. And here’s something I didn’t know until recently: Pres. Washington refused to accept payment for his 8 years in office. Yes, he could afford that kind of selflessness, but so can the majority of our political class–they take the money anyway. As do our big business class titans who somehow can’t make ends meet with less than 10 million per year along with obscene fair-weather-or-foul bonuses.

  6. Rich

    The redistributionist approach of the Democrats under Obama and his surrogate Clinton have done much to destroy small business in this country through taxation in some part but mostly through excessive regulation over the past 8 years. And a lot of these excessive regulations are implemented by executive order instead of the legislative process. The book “What The (Bleep) Just Happened” by Monica Crowley should be required reading for anyone who wants to understand a little better before they vote in November.

  7. Mari

    It is the government that is killing small business. It is the regulations, zoning, taxes, the negative attitude by government employees, the hoops one needs to go through to hire even one person. There are so many laws and rules one uncovers as they go through the process of trying to start a business, it is overwhelming. Add in the power hungry township administrators and zoning boards that change zoning via text amendments so they can sneak in changes without public input. They then issue cease and desist orders to not only you but 30 other owners and close you down all in one township!! these are people who have owned one or two vacation cottages for decades. The township refuses to grandfather us in even though we have from the former zoning administrator a signed document stating that renting a vacation cottage is legal in the township. The current township administrator dismisses that by saying the zoning administrator was incompetent. Really? So we cannot trust the written documents provided to you by the government? We had the support of local businesses. they said closing us down will hurt their business. It didn’t matter to our local government. A lawsuit is too costly. Most of the owners have put the cottages on the market for sale as they cannot afford to keep them. Most were family cottages, but have the non-homestead property taxes. Our township is now flooded with lake side cottages. They are not selling. Our township planner told us that the other townships will be doing the same thing now that our township was successful. We truly were a mom and pop cottage business put out of business by the government despite years of success.

  8. Lisa

    I think the role of health care coverage for entrepreneurs is understated in this article. As a self-employed person I find it to be a real challenge and getting worse all the time.

  9. duane

    We need to look at small/start-up businesses in three parts; the people who want to be create and build a business, the financials of business, and the means to develop and sustain a business.

    If you want people willing and interested in making the sacrifices and taking the risks you need to look to what is the most visible part of our K-12 system, the athletes. Kids learn by modeling and practicing, the sports success are visible and widely heralded, practice is one of the highly visible ways they develop their skills to succeed, and the support/encouragement is highly visible. Do we make business owner role models or are they vilified of have too much of what others work to provide them [do you really think kids want to be vilified?] Do we try to give them ways to practice and develop their business skills [do we related classroom lessons and homework to business, do we bring in successful business owner to help them understand why and how they developed their business?] Do we elevate the importance of a business [product/service, jobs, taxes, economic impact in our communities] and the people that built them to a highly and regularly visible part of our communities? If we don’t do that and others things to encourage school kids to see small businesses as an important of our community why should we think there will be adults who are willing and able to create a business.

    The financial are more than the capital investment, it is about paying bills, creating value, it is about communications, etc. When do kids start learning that, when do adults start learning that, when do our politicians, our communities, those who want jobs start learning that and how?

    When and how do our communities learn what it takes to create and sustain a business so they understand how to support the businesses to build a more stable community? We hear a lot about regulations, when do we teach our state agencies that regulations can help our businesses [especially new and small businesses], when do we teach our regulators that regulations should be as means to transferring knowledge and not as a tool to command and control employers? When do politicians learn that without a growing number of businesses our tax base shrinks?

    If we want to grow the new and small businesses we need to look at the people we need to start and operate them, we need to identify what they need to know, when they need to know it, and how to help them learn it. We need to see business as a jigsaw puzzle that has many pieces and we will never be successful at putting it together if we try to focus on only one or two pieces or we only focus on the one that takes only money and knowledge, skills, and effort.

  10. Robert J Mccormick

    This decline is the inevitable result of the ongoing deindustrialization of the American manufacturing sector. The lack of disposable income in the urban centers eventually robs the rural areas of needed revenues from tourism, investment in local real estate by retirees and vacationers, the opening of branch operations of firms from the urban core,and the tranfers from central government to support rural infrastructure etc. The crash of 2008 is still with us as the article noted. The enormous amount of cheap to free money that flooded the financial sector to stabilize the banks has not resulted in any significant increase in local lending for small and medium enterprises No one wants to lend to small business because there is no real prospect for strong growth in the Michigan economy due to the stagnant wages caused by the offshoring of manufacturing. So we are stuck in a downward spiral that is the inevitable result of allowing business as usual. It will considerable governmental intervention to turn it around and a beginning would be to create a State bank along the lines of the Bank of North Dakota which leverages all the state revenues via fractional reserve bank to finance worthwhile investment in their state since the private banking and finance sector refuses to do so.

    1. carol

      Yours is the only comment on here that offers a real solution that makes any sense.

  11. Rick N

    Good article in general. For the “Up North” take, I think you need to consider the overall population and vacation traffic. When I was younger, we’d go to northern Michigan and it appeared active and dynamic. The last 5 years I’ve been up north, even on holiday weekends, the towns all look very quiet with little traffic. I think a good question is with all the new travel and entertainment choices that consumers have today, is “Up North ” still competitive in this travel and vacation market?
    Consider the Irish Hills area in southern Michigan. In the 50’s and 60’s it was a hot spot to go for vacations. Today , unless you own property there or are going to MIS speedway, you don’t hear people talk about this area as a vacation attraction. Northern Michigan has the same challenge and it will dramatically affect the small business environment. The loss of all the high paying auto jobs killed demand for Northern Michigan vacations.

    1. ***

      With the lower price of airfare it is much easier to take vacations elsewhere in the US and overseas, many more options these days for people to travel beyond their home state of Michigan. In some ways “up north” can be just an old hat thing for people “been there done that” The outdoors and great lakes are nice but having a choice I would much rather see Paris.

  12. Bruce

    What we need from government is less of it.

  13. Phil L.

    At the risk of using an old liberal concept, I suggest buying services and products from independent, locally-owned companies. Mom-and-pop motels, non-chain restaurants, hardware stores, etc. I suppose the Pure Michigan campaign wouldn’t endorse that and neither would the legislature, but wouldn’t it help small business start-ups?

  14. Stephen C Brown

    Many good comments here. The German government (and Italian, before Burlesconi) has been very adept at helping small businesses survive globalization and avoid the tendency for all power-players to focus on perceived “home runs” instead of steady, patient, daily work. Read Wolfgang Streek’s publications, especially “German Capitalism” (1996), to get a gameplan for how government can truly help small businesses and communities. Not surprisingly, a key element is getting the financial sector to invest in business instead of speculation. A North Dakota-type state bank could help, but return to such financial regulations as promoted by Adam Smith (1776), etc. would be a big help. There are also too many layers of government that need to be streamlined, and taxes need to be rationalized and made simpler.

  15. Jim Corcoran

    All of the above comments make valid points as to what is wrong in the State of Michigan when talking about small business economics.
    For me it’s been issues with taxation and the costs associated with that taxation, i.e.-the cost of fighting back against the taxes that I should not have been responsible for in the 1st place and the domino effect it has had financially.
    That domino effect has also cost me reserve capital and now the lack of that capital has effectively tied my hands as to what I can and can not do. It forced me to take money from a source that had extremely high interest rates which in turn tied my hands even more. Freedom? Freedom is a concept that no longer has much meaning in my world. Between the lack of capital and excessive regulations and excessive taxation has effectively put us under the poverty line.
    There is another handicap that faces me as well and that is the lack of qualified employees. Schools no longer teach the blue collar trades as they once did. There is a huge lack of qualified automotive techs coming into the field. At the same time there is a serious problem with guys doing work at home, on the side with no insurance, no licensing, ect. I suppose I understand why they are doing what they do. It is a catch 22 situation for all of us including those doing “back yard” work. For those of us who do things on the right side of the law, this is another serious handicap. When all of the small shops are gone, what will be left? Personally I have no choice because of my age and opportunities that do not exist for those over 50 yrs of age. Somehow I have to make my small business work and succeed. It looks like I will be working until at least the age of 70. I do not want to be old and broke but even tho I work 6-7 days a week, it appears that is what will happen. Help from the Govt or the private financial sector isn’t even on my radar screen. All I see is their hands out wanting more and more and basically nothing in return. This is today’s Michigan.

    1. David Waymire

      Jim, you complain about the schools not giving you the trained workers you want, but you should realize the reason shop classes were closed is because we cut taxes, and schools cut out their high priced classes…like shop. Easier to have an English class than to hire a well paid tradesman to leave his job and take up teaching in a room full of expensive equipment that needs lots of insurance.

      Hard to take comments about excessive taxation when the fact is we have no business tax for most small business, and a very low income tax. And for those businesses looking to Indiana for an example, be aware that is has a lower per capita income than Michigan…one of the lowest in the nation. Poor people can’t buy stuff.

  16. John Pickett

    With the government ‘giving away’ money to banks at or near 0% interest, big banks, instead of investing in small business, prefers to pour the money into credit cards and payday loans, where they can reap the biggest rewards while serving themselves. Banks need incentives to loan to risky small business. They are getting fat from easy money and lazy profits. It helps that they currently write their own regulations for the government. Thank you ALEC! We need more Barney Franks and Bernie Saunders, and less Hank Paulson and Donald Trump doing the regulations!

  17. Jim

    “reversing the state’s decline rests on a couple of fundamentals: more access to seed money, and improving the business literacy of first-time entrepreneurs.” This comment from the article shows a total emphasis on supply side. If you want to sell more product, no matter what the product is, people need to have the money to buy it. Increase demand. See Henry Ford and the $5 a day. It’s not that simple but look at both supply and demand.

  18. John

    I think all of this emphasis on small business and “entrepreneurship” is an effort by big businesses to shed their obligations as employers, and shed some risk at the same time, by contracting out things that they used to do internally. While I am no fan of corporate giantism, it does make sense in a lot of cases to reduce risk and increase efficiency by operating with a bigger “command economy” within an organization, rather than trying to renegotiate contracts all the time. Unless you are big enough to dictate the terms.

    And I have trouble thinking of someone opening the forty-seventh coffee shop in a community as an “entrepreneur” or “innovator.”

    1. ***

      Lansing has around 70 marijuana shops.

  19. Carol

    I’m a first time business owner, if you want to call it that. I’ve started the business with the state and am currently looking for financing to actually start it. SBDC have assisted me but I am getting more success with SBA. I see most people knowing how to manage and sell verses knowing the bookkeeping and financial aspects of owing a business. I know I fall into that category, but, I’ve been learning it while one creates their business plan. I personally have issues with our auto and load insurances in Michigan. They are way to high and all we have to do is drive south to Indiana and insurances are half of what they are here. Which leaves a business owner with the decision of what is more important, family or pack up and move to another state so you can make a living as your own boss? We shouldn’t be put into that position. Either way we loose.

  20. Victor

    There was another study floating around that showed job generators are medium sized businesses. Small businesses are a tradition in America, but it’s my understanding they don’t actually improve their local communities all that much.

  21. Bob

    California has higher taxes than any state in the U.S., including Michigan, and yet has the most thriving startup business culture in the world, particularly Silicon Valley/SF. It is the home of 5 of the 10 most valuable companies in the world, all of which were startups not long ago (eg Google).

    No one likes to pay high taxes, but tax rate is clearly not the most important factor in the success of a business startup. Why are startups thriving in California?

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